BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M. Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
rule apply as directors are not held personally liable for the decisions made on the company’s behalf where the directors have acted honestly, in good faith and with a view to the company’s best interests. However, the courts will not automatically defer to the directors’ decisions in takeover situations solely because the directors have acted in the pursuit of their duties. Rather, if they disagree with the decisions of the director when they exercised their duty, the courts will rule in favour of the claimant, and the company will be held liable. Similarly, if they agree with the deci - sions of the directors, the courts will rule in favour of the directors’ decisions, and not solely based on whether the directors were carrying out their duties. For example, in Ansa McAL (Barbados) Limited (ANSA) v Banks Holdings Limited (BHL) and Slu Beverages Ltd (SLU) BB 2016 CA 13, ANSA (a shareholder of BHL) brought an oppression remedy action against BHL and SLU in the Supreme Court of Barbados regard - ing a loan agreement entered into by BHL’s directors. ANSA alleged that the loan agreement would have the effect of conferring special rights and privileges on SLU’s conversion shares, which would require the shares to be redeemed by BHL upon a funda - mental change (such as a takeover) at a premium of 2.5 times the value of the shares. This premium was not conferred on the common shares held by ANSA and other shareholders, giving SLU an unfair advan - tage over ANSA and the other shareholders who held common shares. Also, the payment of this premium would place a significant financial burden on BHL and decrease the value and marketability of the shares. This action was initiated during the takeover of BHL shares by SLU, and while seeking this claim, ANSA made an interim injunction application to restrict BHL from performing some of the provisions in the loan agreement. This application was initially granted but subsequently discharged. Upon appeal, the court granted the interim injunction and, in making its rul - ing, did not automatically defer to the decisions of the directors to enter into the agreement. Rather, the court acknowledged that ANSA’s affidavit evidence established a serious claim regarding the infringement
on the shareholders’ interests due to the provisions in the loan agreement and ruled in ANSA’s favour. Alternatively, in Kenneth Went v Cable & Wireless BB 2018 HC 26, the court ruled in favour of the directors’ decision and denied the shareholders’ action for an interim injunction. However, the court made this deci - sion because it disagreed with the claimant’s views and not solely based on whether the directors acted to carry out their duties. The claimant shareholders alleged that the amalgama - tion of Cable & Wireless (Barbados) Ltd and CWB Ltd (NEWCO) was a takeover disguised as an amalgama - tion to avoid compliance with the Take-Over Code. They also proposed that the amalgamation would lead to the delisting of Cable and Wireless from the exchange, which would eradicate the public market for their shares and result in an unfair squeeze out of the minority shareholders, thereby forcing the minor - ity shareholders to sell their shares. This substantive matter is presently before the Supreme Court of Bar - bados. A shareholder in this matter sought an interim injunction to prevent the directors from cancelling the shares held by them, and to prevent the directors from delisting the company from the BSE. The court ruled in favour of the directors. Although the court acknowledged that there was a serious issue to be tried on whether the amalgamation was oppressive and acknowledged the claimants’ arguments that the amalgamation functioned like a takeover, they decid - ed in the defendants’ favour as there was a significant delay in the filing of the claim for interim injunctive relief, and they disagreed with the claimants’ view that damages were not an appropriate remedy to fairly compensate the minority shareholders. Additionally, as the amalgamation was completed and over BBD61 million was paid to minority shareholders, the granting of an injunction would cause further issues. 8.4 Independent Outside Advice The board of directors usually relies on advice from external counsel on the most cost-effective structure to use for the transaction, cost assessment and set - tlement of the transaction documents. In takeover transactions, the board can create a committee, com - prising the independent directors, with a mandate to
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